Getting creative with commissions

Everybody loves a reward, right? The right reward can make your employees work harder, and drive your company to success. The standard way to reward sales people is to pay them a percentage of the sale, otherwise known as a commission. xTuple software has always allowed you to assign a commission percentage to each sales rep, and to record the commission to be paid to that rep for each invoice. They make the sale, they get the reward. It's a basic but effective commissioning system that suffices for many companies.

But others would like to see more. In the hands of a creative sales manager, commissions is one of those business arts, like pricing and discounts, where people can mold sophisticated architectures aimed at influencing behavior in specific ways. Perhaps you want to encourage reps to push a particular product line, or to sell closer to the list price with less discount. Maybe you want to set commissions by item or by customer type, rather than assigning fixed rates to individual sales reps. This kind of flexibility can give an innovative sales manager the power to shape a sales strategy, and to reward reps for aligning with the overall goals.

Up to this point, xTuple has not offered that level of flexibility in sales rep commissioning. We have received requests over time to add features, but only recently did a company decide these features were important enough to sponsor an enhancement to the product. And so, the advanced Enhanced Commissions project was born.

A quick review of what's involved when you attempt to create a flexible, complex addition to your xTuple software. First, we gathered the requirements. The sponsoring company already has a complex commissioning plan in place, managed on spreadsheets and ad hoc databases, and we began by documenting all the current commission structures. There were inside reps and outside reps. There were product lines with different commission bases. There were sales managers who also got commissions on each sale. And the commissions had to allow for multiple reps to be commissioned not just per invoice, but per invoice line.

The next step was to design a tool to manage a commission structure like this. We needed a software system that could reproduce all the nuances of the company's existing commissions schedules, but from screens inside of xTuple. And here we were very fortunate: the manager at the sponsoring company understood the importance of building a system that could accommodate not just his own company's current commission structure, but also a wide variety of other potential arrangements. We were always trying to balance between flexibility and simplicity, the ultimate challenge of software design.

Once you've got a spec, you go into development. That's where we are now. When the Commissions project emerges from development in a few weeks, it will go through testing, and then it will be incorporated into version 3.8 of xTuple, specifically into the Enterprise edition of the software.  It will also be available as a free-standing package which can be added on to any other Edition.

We think Enhanced Commissions is going to be a very desirable feature, particularly for companies with a dedicated sales force who want to exercise creativity in assigning commissions. On the whole, this has been a great example of the xTuple sponsored-development model, where one or more companies contributes code that improves the whole product. And that kind of success is its own reward.